Tuesday, January 31, 2012

In what assuredly would be a devastating economic indicator for President Obama, the Congressional Budget Office (CBO) came out with a report forecasting the unemployment rate for 2012. While manipulated BLS reports in November and December dropped the rate down to 8.5%, the truth is those numbers reflect less people receiving unemployment benefits and don't take into account the hundreds of thousands who fell off the roles.

Unemployment to remain above 8% in 2012 and 2013; will be around 7% by end of 2015; to drop to 5.25% by end of 2022.

This forecast is utterly idiotic and is completely unattainable unless the US workforce drops to all time lows and the US economy generates 300,000 jobs a month for 10 years

Needless to say, CBO assumes the best of all worlds in this meaningless forecast

But here is the kicker: "Had that portion of the decline in the labor force participation rate since 2007 that is attributable to neither the aging of the baby boomers nor the downturn in the business cycle (on the basis of the experience in previous downturns) not occurred, the unemployment rate in the fourth quarter of 2011 would have been about 1¼ percentage points higher than the actual rate of 8.7 percent" translation: CBO just admitted that the BLS numbers are bogus and real unemployment is 10%. Thank you – CBO via Zerohedge

Never ask the government how many people are out of work, ask a bean counter, for they are the ones who are paying the benefits for those out of work.

UBS analyst Art Cashin today showed a chart on how January is historically a very bad month for job creation, and in fact, should belay the loss of hundreds of thousands of jobs now that the Christmas season is over.

Disappointing Jobs - While everyone seems to debating what the non-farm payroll numb will be Friday, a few are looking toward the annual revisions in the much debated Birth/Death model.

As you probably recall, it does not refer to the birth or death of humans. The badly named model refers to the birth and death of businesses. Each January the BLS revises the number, usually vaporizing thousands of jobs.

The Net Birth/Death (NBD) statistic adjustment – an adjustment the BLS uses to account for job creation or loss with respect to births and deaths of businesses – is always the weakest during January. Over the last five years the NBD for January has averaged -335k. [January 2011: -339k, January 2010: -427k, January2009: -356k, January 2008: -378k, January2007: -175k.] – Art Cashin via Zerohedge

Leave it to the EU to think like elite liberals when it comes to feeding the masses in the wake of their banking crisis. A new program funded by the European Union will seek to determine the protein attributes of insects, and research ways to make them a staple food source for the nations seeking nourishment.

The EU will spend three million Euros to research 'the potential of insects as an alternative source of protein.'

Research projects will be selected this year.

'While many insects are regarded as pests, the UN's Food and Agriculture authority is interested in promoting edible insects as a highly sustainable source of nutrition.'

Some worms contain three times as much protein as beef per ounce, while four crickets have as much calcium as a glass of milk. – Daily Mail

While the French have been partakers in snail cuisine for centuries, the rest of civilized Europe has sustained their health on standard agricultural products for most of their existance. Perhaps then, the EU's new program is a foreshadowing of a much greater segregation between the haves and the have nots, and who is allowed to eat what when food becomes scarce in the bankrupt countries.

Monday, January 30, 2012

The trustee for the MF Global bankruptcy has coined a new term to describe the theft of customer money and accounts. Instead of using the criminal term stealing, or the legal term re-hypothication, the word Vaporized is being given by court appointed trustees for the whereabouts of private accounts and customer cash.

"As the sprawling probe that includes regulators, criminal and congressional investigators, and court-appointed trustees grinds on, the findings so far suggest that a "significant amount" of the money could have "vaporized" as a result of chaotic trading at MF Global during the week before the company's Oct. 31 bankruptcy filing, said a person close to the investigation." – Wall Street Journal

TO what end MF Global's actions and the subsequent court findings may have for future brokerage firms is uncertain at this time, but the old axiom of, "if you don't hold it, you don't own it' works everlastingly.

It's the Year of the Dragon on the Chinese calendar, but early on in 2012, it can now be said it is the Year of the Golden Dragon. Gold sales are up 49.7% during the week long celebration.

Xinhua, the official press agency of the government of the People's Republic of China reports that a "gold rush" swept through China during the week-long Lunar New Year holiday this year, with demand for precious metals and jewelry surging since the Year of the Dragon began.

Data released by China's Beijing Municipal Commission of Commerce shows a 49.7% increase in sales volume for precious metals jewelry and bullion during the week-long holiday (over last year), which lasted from January 22 to 28 over that of last year's Spring Festival. – Goldcore via Zerohedge

Couple this with the recent $100.00 move for gold on the New York exchanges in just 2 days and the astrological calendar may indeed be pointing to 2012 as a great year for the yellow metal.

Friday, January 27, 2012

Cash, liquidity, capital... all words that describe the mediary tool of conducting transactions for goods and services in the marketplace, as well as the foundations of business and government funding. For years, technology has increased in scope almost to the point where electronic transactions could one day replace physical cash in selling and purchases, and additionally, the agenda and policies to force Americans to that new paradigm are currently being discussed.

On January 24th, John Galt FLA of the Shenandoah Blog and of the Voice of Galt on the Just Measures Radio Network, reported that he has been receiving strong news from inside sources that the government is looking very hard into cash controls on citizens in the United States. Cash controls are a program where people are limited to a certain amount of cash they are allowed to spend per week, month, etc..., and businesses would be the ones to document and turn away those who might spend more than the allotted amount. This process is already taking place in countries like Greece, who are forcing their citizens to limits on cash transactions.

The emphasis however, is on cash, not credit, debit, or other means of asset usage. And the rise of the Smartphone is making it very easy to carry a virtual wallet with you, by which cash can nearly become obsolete.

PayPal, which is beginning to roll out in-store e-payment systems, starting with Home Depot (HD -0.56%), will be one of those companies relying on smartphones as part of the new payment systems.

In fact, if you look around, smartphone "wallets" are suddenly everywhere. Get in line to board a flight, and odds are that you'll spot someone ahead of you offering up their smartphone with an image of their boarding card rather than an antediluvian paper boarding pass. A PayPal developers' conference even featured the demonstration of someone using a smartphone (along with Twitter and a PayPal account) to buy a gumball from a machine. – MSN Money

While these new measure might not be the proverbial 'mark of the beast' predicted in the biblical book of Revelation, the groundwork for the end of cash is very quickly being installed in nations and businesses around the world. Holding cash is a like holding gold for citizens... a control over your monetary finances, but when it moves completely to an electronic system, your power over your money get removed, and your future choices become limited to ones governments and businesses want you to make.

Over the past month, two iconic companies filed for bankruptcy as the economic recovery proves to be little more than smoke and mirrors, and a growing of printed money from the Fed while GDP and consumers spend less and less. Eastman-Kodak and American Airlines were some of the first, but a new list by Business Insider shows that up to 17 more stand on the precipice of bankruptcy themselves.

As economic recovery moves slowly and gradually in many cities and areas around the US, a new study by Louis Ferleger of Alter Net lays out 216 economic dead zones that have not been a part of this emergence, and are in fact moving further away from recovery.

There are 216 defined metropolitan (metro) and micropolitan (micro) areas—with populations ranging from 10,000 to 4 million—that have had unemployment rates at least two percentage points higher than the national average for either 20, 10, or 5 years (see tables 1, 2, 3 at the end of this article). These are America’s dead zones. Here employment growth is stagnant or non-existent and high levels of joblessness dominate. Some areas were once prosperous while others have recently experienced economic distress. In these communities paid work is hard to find for those who have not given up looking, and widespread involuntary idleness is the norm. – Alternet

Here is a list of these cities and dead zones courtesy of Alternet.org

America has a history of cities and areas rising and falling for one reason or another. The gold and silver rushes of the 19th century hold a plethora of ghost towns that were at one time some of the richest municipalities in the country. Today, the city of Detroit is becoming one with the loss of so much industry, automobile manufacturing, and a brain drain out of the city and state.

Thursday, January 26, 2012

Max Kaiser did a recent interview with former Wall Street executive Warren Pollock on the state of the economy, and what he foresees in the near future for the government and monetary system.

In the interview, the economic blogger made the prediction that "they are setting themselves up for a bank holiday"

Max Kaiser: Weve gone over the MF Global story, tell us what you think is the bigger picture from MF GlobalWarren Pollock: Right now we are watching law being changed to selective interests... the interests of JP Morgan, Goldman Sachs, and the banking cartel. And what they're trying to do right now is set themslves up for a bank holiday. And what they're saying is, their speculation will always be subsidized by customer funds.

The small but industrious nation of Japan has just finished adding a few more zeros to their computer models as sovereign debt for the Asian powerhouse has just crossed a new Rubicon.

$1 quadrillion yen.

Yesterday the Japanese Finance Ministry made a whopper of an announcement: in the year ending March 2013, total Japanese debt will surpass one quadrillion yen, or ¥1,086,000,000,000,000. This is roughly in line with the Zero Hedge expectations that by this March total Japanese debt would surpass one quadrillion yen. In USD terms, at today's exchange rate, this is precisely $14 trillion. - Zerohedge

In simple terms, this is the inevitable state of a nation who prints, and relies upon a fiat currency. Once started down the path of money printing to create growth and productivity, there is no turning back until its entire devaluation leads to a collapse.

Tuesday, January 24, 2012

To say that the young, and those graduating from college will have a difficult time in the job markets and future financial system is an understatement. Especially as new data out shows that the median net worth for those under the age of 35 has dropped more than 300% in the past 25 years.

The majority of this disparity is tied to the continuing devaluaton of the dollar, the massive increases in personal debt, and finally coupled with the rise in student loan debt.

It took long enough, but it appears that sovereign governments just won't go down without a fight to save their corrupt economies. In a event that makes you reminisce about the days of Benito Mussolini, the Italian police brought the hammer down and busted into the offices of Fitch weeks after the ratings agency began downgrading their sovereign debts, and uncovering the toxicity of their Euro bonds.

The Italian tax police was in the offices of ratings agency Fitch in Milan on Tuesday to carry out checks ordered by prosecutors investigating rival agencies Standard & Poor's and Moody's, a senior prosecutor told Reuters.

"Men from the financial police are at Fitch in Milan," said Carlo Maria Capristo, chief prosecutor in Trani.

Now, we know the Fed releases inside information to their lackeys in advance of montary policy changes and news, and ratings agencies such as Fitch and Standard and Poor may be doing so as well, but it is humorous for nations such as Italy to be using that as a scapegoat to cover up their own poor abilities in dealing with economies, debt, and monetary systems.

Monday, January 23, 2012

We are now within one year of several tax breaks for the American people being cutoff, and the population being assessed massive increases in several key areas. Since Congress and the White House have failed to address even a new budget, the chances of them overturning, or remitting these tax increases becomes smaller and smaller.

First Wave: Expiration of 2001 and 2003 Tax Relief
In 2001 and 2003, the GOP Congress enacted several tax cuts for small business owners, families, and investors (later re-upped by President Obama and Democrat Congress in 2010). The following tax hikes will occur on January 1, 2013:

Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which the majority of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:
- The 10% bracket rises to a new and expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%

Higher taxes on marriage and family.

Middle Class Death Tax.

Higher tax rates on savers and investors.

Second Wave: Obamacare Tax Hikes
There are twenty new or higher taxes in Obamacare. Some have already gone into effect (the tanning tax, the medicine cabinet tax, the HSA withdrawal tax, W-2 health insurance reporting, and the “economic substance doctrine”). Several more will go into effect on January 1, 2013. They include:

Medicare Payroll Tax Hike.

“Special Needs Kids Tax.”

Medical Device Tax.

“Haircut” for Medical Itemized Deductions.

Third Wave: The Alternative Minimum Tax and Employer Tax Hikes
When Americans prepare to file their tax returns in January of 2013, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. The major items include:

The AMT will ensnare over 28 million families, up from 4 million last year.

Tomorrow night is President Obama's State of the Union address, and the state of the union is poor. At least according to a new Gallup poll on how Americans feel the government is dealing with the economy.

"As President Barack Obama prepares his annual address to Congress, Americans are broadly dissatisfied with the state of the nation in several specific issue areas, with satisfaction down sharply in some cases since January 2008. However, three issues -- the nation's economy, the size and power of the federal government, and the moral and ethical climate in the country -- fit both of these unwelcome criteria." And with the only response the administration has in the past three years consisting of either printing more money which sends all assets, especially energy, higher in price, or fiscal stimulus of which 90% and more is lost due to inefficiencies and corruption, we don't see satisfaction rising any time soon. - Zerohedge

2012 may not be the end of the world according to the Mayan Calender, but it is well on its way to being the end of American domination in the global economy.

There is one thing to create safety nets to help those down on their luck, or in transition from one stage of life to the next, but there is another where a society has become so apathetic that it requires 15% of all production to be given out to those who do not produce.

The single most disturbing statistic: in 2011 nearly half of the population lived in a household that receives some form of government benefit, which in turn accounted for 65% of total federal spending, or $2.5 trillion, and amount to 15% of GDP. And yet some people out there still think these people, long since indoctrinated to do little but mooch off the welfare state… - Zerohedge

Chart courtesy of John Lohman

To all the bleeding heart Occupy Wall Street characters... very soon, your mooching off Uncle Sam will lead to a complete breakdown of the system. Then who will support your life of protesting?

Think gold is not money to central banks and governments? Just look at one of the prohibitions the EU imposed on Iran recently in their economic sanctions.

Reuters report that the EU has agreed to freeze the assets of the Iranian central bank and ban all trade in gold and other precious metals with the Iranian Central Bank and other public bodies in Iran.

According to IMF data, at the last official count (in 1996), Iran had reserves of just over 168 tonnes of gold. The FT reported in March 2011 that Iran has bought large amounts of bullion on the international market to diversify away from the dollar, citing a senior Bank of England official.

Saturday, January 21, 2012

Silver had a wonderful day on Friday, sparking a 5% move to close at $32.30. Along with silver, gold, Platinum, other metals and the Dow all increased by the end of trading.

What were the catalysts for these moves? It may have been a two-fold action. First, the dollar was in decline throughout the day, and the Euro has recovered around 300 bps since its 126 lows earlier in the week. This could very well signify that the markets are factoring in QE3 by the FED, and the rumored $1 trillion in quantitative easing. Secondly, and particularly for silver, buying may be in play by Eric Sprott for his PSLV etf, in which he guarantees all contracts will be backed by physical silver, as opposed to the JP Morgan manipulated SLV and GLD on the American exchanges.

Here is the kicker as well... if $300 million purchased in silver can lead to a 5% increase, how much could a $3 billion or more move cause the price to climb?

"Today’s incredible move was the culmination of a comment made by UBS analyst Edel Tully. He stated that hedge fund manager Eric Sprott may be in the market buying spot futures in a private letter to his clients." And even as the premium dropped, the price of spot silver increased by over 5%, on the speculation of silver being taken out of the market and delivered to Sprott.

So to summarize: speculation that $300 million in physical silver may be taken out of circulation raises the price of the underlying by 5%. Does that mean that a $3 billion follow on would result in a 50% rise in spot; $30 billion in 500%, and so on? - Zerohedge

Contrary to manipulated government and NAR reports, housing numbers are not improving by any real sense in every area of the industry. Going into 2012, the number of housing starts, home sales, and writedowns still remain close to record lows of the last 60 years.

Residential Write Downs: This is resurfacing for the umpteenth time. Today’s version came from HUD secretary Shaun Donovan (via Reuters). A rumored settlement involving $20-25 billion dollars in relief to distressed homeowners from banks involved with robosigning (BAC, WFC, C, JPM, ALLY etc.). The settlement might kick a $20,000 reduction for one million borrowers who are underwater.

New Home Starts: Total housing starts fell 4.1% in December to an annual rate of 657,000, reflecting a 20.4% decline in construction of multi-family units and a 4.4% increase in single-family starts.

Remodeling Moves Higher: “People are remodeling instead of moving” said David Crowe, chief economist of the painfully obvious at the National Association of Home Builders. The key to this are the huge number of current homeowners who either are unable to sell their currents homes, or if they do, no longer will qualify for a new mortgage, or lack a 15-25% down payment for another purchase in order to move.

The bottom line remains: Housing is a dark spot in the economy, and the regular bottom calling we hear is best ignored. One day, housing will once again begin contributing to US economy, but until we see higher Employment and greater household formation, that time is off in the future. – Ritholtz.com

This also doesn't take into account the new foreclosures that are expected to hit the markets in 2012 after local and federal judges overturned the MERS lawsuits and rights of banks to foreclose when they don't hold the note.

You know that either the world has turned upside down, or that even liberals are coming to a point where the government system is no longer fixable. In an astounding remark by known critic Bill Mahar, he lambasted those who are purposely opposing Ron Paul as 'Brainwashed Liberals'.

Thursday, January 19, 2012

Yesterday, the Daily Caller came out with a blast from four years ago when they re-published a copy of The Romney Book. This 'book' was an investigative look at Mitt Romney's financial, political, and social actions over the course of his career, and was researched by the John McCain's campaign team of 2008.

The file explores everything from the assessed value of Romney’s house (“$3.162 million”) to his views on the Boy Scouts’ ban of homosexuals (“publicly opposed … in 1994 and 2002 campaigns”). It was made public Tuesday on the social media website Buzzfeed, although it appears to have been accessible online for two months.

The document, given the name “The Romney Book,” was viewed less than 100 times on the page where it was originally uploaded by its anonymous leaker on November 11.

Congressman and Presidential candidate Ron Paul continues to put his money where his mouth is, and on Wednesday, he did so once again. Leaving the campaign trail of South Carolina for a day, Paul went back to the House Floor and submitted a bill to repeal draconian parts of the new National Defense Authorization Act.

Part 1021, which currently gives the Executive Branch carte blanche authority to arrest and detail without warrant or legal representation anyone deemed with the spurious title of 'terrorist', was the primary portion of the NDAA bill Ron Paul seeks to remove.

You can see his House floor speech and bill submission in the video below.

Wednesday, January 18, 2012

On Janury 17th, representatives from the World Bank publically admitted that the Euro Zone is an area wide recession, and for the member states to prepare for the worst as it continues to escalate in stature.

WORLD BANK CUTS GLOBAL GROWTH OUTLOOK, SEES EURO-AREA RECESSION

Bloomberg, which just released an embargoed summary of the World Bank action, summarizes it all.

World Bank cuts global growth forecast by most in 3 yrs as euro area recession threatens to exacerbate slowdown in emerging markets, World Bank says in Global Economic Prospects report.

Sadly, you know things REALLY have to be bad when the central banks actually tell the public the truth, and something we already knew, since over the last year these same institutions kept giving the world a false bill of sale on just how critical the Euro economic system really is.

On January 15th, Ron Paul took time to speak to a group in South Carolina during his campaign trek. He laid out before the people the true end game of the current financial and economic crisis, and that being the creation of a new global monetary order which is being driven by the UN and IMF.

"We have a financial crisis... they know it as much as we do, and they're planning an international answer to this." "They're planning through the IMF to come up with a world currency to replace the dollar, because the dollar will be replaced... you just can't keep printing them forever."

Tuesday, January 17, 2012

The Thompson Rueters gold survey for 2011 was recently released and the results showed a large surge in gold coin and bar sales globally last year. Predictions for 2012 also point towards a steady climb back up towards $2000 an ounce, with potentially higher gains should central banks begin to monetize en masse.

Thomson Reuters GFMS annual gold survey released today shows that global investment increased 20% last year to $80 billion, leading to the nominal high last September of $1,920/oz. This is primarily attributed to the physical buying of bullion.

Gold may climb to a new nominal record above $2,000/oz by early next year as concern about currencies and low interest rates encourage investors to seek a protection of wealth, Thomson Reuters GFMS said.

Gold coin purchases gained 13% last year and will increase 2.7% in the first half.

New campaign contribution records out show that Mitt Romney is the primary presidential candidate to be receiving donations from Wall Street and banking interests for the 2012 election. He joins Barack Obama and George W. Bush, who in 2004 and 2008 respectively received similar contributions from the banking machine.

Charts courtesy of opensecrets.org

As you can see, it doesn't matter which poltical party a candidate is tied to... Wall Street ALWAYS hedges its bets.

In reality, Greece defaulted last year when it failed to rollover debts that came due in the Euro Zone, but like most zombie banks and nation states, central banks in the West are able to keep the old men from dying long past the point they were little more than a stinking corpse.

Friday, January 13, 2012

A London based Hedge Fund, Toscafund, came out yesterday with an analysis of what would happen to Greece if they should voluntarily, or be forced to evacuate the Euro Zone. The results are not pretty as the fund predicts hyperinflation, massive riots and social unrest, and a potencial coup which would topple the government.

"A Greek exit from the euro zone would be worse than catastrophic and could provoke greater social unrest, Zimbabwe-style inflation and a military coup, said London-based hedge fund firm Toscafund. In a stark note to clients, chief economist Savvas Savouri said introducing a new currency instantaneously in the wake of a euro exit would be impossible and the delay would lead to "a run on banks and evacuation of capital that would make what has already been seen as nothing by comparison". "The word catastrophic would not do it justice enough," said Savouri, who comes from a Greek Cypriot background. "Those who imagine some post-euro-exit stability would be restored ... quite simply fail to understand the magnitude -- social, economic and political -- of such an eventuality." - Zerohedge

Citizens of the Mediterranean country should make sure to stock up on ouzo, since its alcoholic content makes wonderful molotov cocktails.

Since Governor Jerry Brown took office, the state of California's economy has improved little, and in fact, has continued to lose jobs, income, and GDP.

Of course, for a progressive liberal like the 'moonbeam', the answer is not in changing the regulatory state of California, or lower taxes to attract businesses, but his answer is like another well known Progressive in America: raise taxes on the rich.

Thus, Jerry Brown is simply 'Obama light', and his lack of economic intelligence runs the gambit of every other Keynesian progressive who can't keep his budget within his means.

California has more folks on food stamps than any other state, has added so many benefits and higher rates to Medicaid that we call it "Medi-Cal." Our K-12 schools have more administrators than teachers, and smaller classes but lower test scores and higher dropout rates with twice the per-student budget of 15 years ago. Good job, Brownie.

This week, the once and current Gov. Jerry "Moonbeam" Brown had to confess that the "balanced" state budget adopted five months ago was billions in the red because actual tax revenues were billions lower than the airy-fairy revenue estimates on which the balance was predicated.

Brown's proposal would add 2% for income over $250,000. A million-dollar income would then be taxed at 12.3%. And that's just for the state.

Brown also proposed a one-half-cent sales tax increase, which would bring sales taxes (which vary by county) to 7.75% to 10%. Both tax increases would be on the ballot in 2012. – Human Events

Thursday, January 12, 2012

Sears holdings received another death knell blow this morning when Cit Group made the decision to stop financing loans to suppliers, which are a vital part of their payables accounting practice.

And here, as there, we expect shorting to death to commence in 5...4...3..." Subsequently, when the company was downgraded to triple hooks S&P we said that "Accounts Receivable about to become one big perpetition charge off", the implication naturally being that the company is about to lose its vendor financing - which for retailers is the last step before outright default. Sure enough, the WSJ reports that this is precisely what happened. "Struggling Sears Holdings Corp. suffered another setback when a large lender said it would no longer finance loans to suppliers awaiting payment from the company. - Zerohedge

For those who can remember, something similar took place between General Motors, and one of their primary distributors Delphi just before the automobile's bankruptcy.

After gold prices fell nearly 30% in the last part of 2011, the pullback appears to now be complete as premiums for purchasing the yellow metal are now increasing over in Asia, as sales begin to build once again in early January.

Demand in Asia continues to be strong. China remains the world’s largest producer of mined gold.

Premiums for gold bullion bars in Asia are rising again and are at their highest since October in Hong Kong and Singapore. Premiums are at $2.15/oz in Hong Kong and $1.65/oz in Singapore. Bullion’s strength was also attributed to the euro’s 16 month low, with Fitch warning the ECB to purchase assets to try to stabilize the euro.

Spot gold was up 0.6 percent at $1,650.34 an ounce at 1009 GMT, having earlier touched a one-month high at $1,652.30. U.S. gold futures for February delivery were up $12.60 an ounce at $1,652.20. - Zerohedge

It is a rare thing when a politician keeps his word (and isn't named Ron or Rand Paul), but kudos need to go out to the mayor of Pittsburgh who followed through with a lost bet after Sunday's Wild Card game between the Steelers and Broncos.

If Pittsburgh lost, Mayor Luke Ravenstahl would be required to don a Broncos jersey, and be pictured Tebowing in public.

Picture courtesy of KUSA

Great job mayor for being a rare politician who kept his word, and congrats to Pittsburgh on a great year despite all the injuries.

Over the Christmas holiday, President Obama tried to downplay the need to call upon Congress for a raising of the debt ceiling, only to pull back the request. That delay appears to have only lasted two weeks as once again news is coming out that Obama plans to submit to Congress a request to add to the nations debt just five months after the debt ceiling showdown.

And as The Hill reported yesterday, Obama is expected to request that Congress allow the incremental and final $1.2 trillion debt expansion (of the $2.1 trillion total) within a few days. So it is all on autopilot right? Wrong. As Bank of America explains below, it is very likely that the US will not have a debt ceiling hike for at least a few weeks, meaning that while a debt hike will ultimately come, it will very soon be all the song in dance, potentially overtaking the GOP drama, coupled with the pillaging of government retirement accounts yet again and likely leading to more rating agency action as the US debt fiasco is once again brought front and center. - Zerohedge

Ironically, any publicity about raising the debt ceiling may actually help Presidential candidate Ron Paul, as it will give him ammunition in his debates and stump speeches that the government, no matter who is in office, is completely out of control and bankrupt.

Yesterday, we wrote on the growing escalation of war from Iran because of internal hyperinflation threats within their economy. Today, Iran experienced two events, one economical, and one of a terrorist attack which seems to validate this assertion.

Today EA WorldNews gives us the response, which confirms that indeed the economy is in terminal shape following an interest rate hike to 20%. From the Source: "State news agency IRNA has no news on the Iranian currency this morning, but it does feature an interview with an official, noting the rise in interest rates to 20%. The effort is to reduce the flow of cash in the economy, but the official says it will increase capital investment by banks in an "impressive market"." - Zerohedge

Iran is moving towards that unique position where it will soon have to deal with both internal and external forces seeking to bring down the rulers of the Islamic nation.

Welcome to 2012, where silver sales by the US Mint in the first few days have already outpaced sales in most full months of 2011.

In the first few days of 2012, the US mint has already sold 4.3 million ounces in silver coins. This is more than in all individual months of 2011 except for January and September, when the mint sold 6.4 million and 4.5 million ounces. Is the retail love affair with physical silver coming back with a vengeance? - Zerohedge

Courtesy of Zerohedge

As a validation of silver, the metal crossed back over $30 an ounce yesterday for the first time in over a month.

Tuesday, January 10, 2012

Hungary has become the latest Euro Zone nation to now be willing to compromise on sovereign rights to be eligible to get ECB bailout money in a change of course from prior defiance.

If there is any one more vivid confirmation of Mayer Rothschild words "Let me issue and control a nation's money and I care not who writes the laws" then we have yet to find it. Today Hungary, which had "valiantly" defied Europe and the IMF in ignoring pressure to make its central bank more "malleable" finally folded, following a recent explosion in its bond yields, a surge in CDS to records, and a collapse in its currency. And to think how easy it is to subjugate a state to slave status in our "globalized" days without shedding one drop of blood. Reuters reports: "Hungary's government is ready to consider modifying disputed legislation if the European Commission deems it necessary, Foreign Minister Janos Martonyi told the bloc's executive and European Union partners. - Zerohedge

The need for money many times outweighs the desire to be self-sufficent and rule your own people. Or as the bible once pointed out, the borrower is slave to the lender.

Two more countries have joined in the trend started by China and Japan recently, where they bypass the dollar and instead use their own currencies directly in trading. Iran and Russia have made a trade agreement on January 7th which moves the stakes ever closer to the end of the US's reign as the reserve currency.

Speaking to FNA, Tehran's Ambassador to Moscow Seyed Reza Sajjadi said that the proposal for replacing US Dollar with Ruble and Rial was raised by Russian President Dmitry Medvedev in a meeting with his Iranian counterpart Mahmoud Ahmadinejad in Astana on the sidelines of the Shanghai Cooperation Organization (SCO) meeting.

"Since then, we have acted on this basis and a part of our interactions is done in Ruble now," Sajjadi stated, adding that many Iranian traders are using Ruble for their trade deals.

"There is a similar interest in the Russian side," the envoy stated, adding that that Moscow is against unilateral sanctions on Iran outside the UN Security Council, specially the recent sanctions against Iran's Central Bank (CBI). – Fars News

The battle over Iran is indeed taking on more than simply a nuclear threat option. It is pitting economies vs economies, and superpowers vs superpowers in a chess match for supremacy. As the West overleverages itself on devalued dollars, the resource rich nations are willing to move away from the reserve and petro-dollar currencies, and towards a new paradigm for trade.

Gold is up over $25.00 this morning on stronger commodity news, and a strengthening Euro. The yellow metal rebounded back over the 200 DMA support level and appears to be consolidating for the next run after a 30% pullback.

Remember when various economics professors and self-anointed Ph.D'ed market timers said to sell everything because the gold 200 DMA had been breached to the downside, never to be crossed back again, to which our simple retort was, "Many are doing their damnedest Ph.D.-best to somehow fuse economic theory and technical charting, and state that a breach of the 200 DMA in gold is indicative of imminent price collapse. So much for technicals. Sure enough: less than a month later, and $100 higher, gold is right back above the 200 DMA. Oh, and we expect to hear nothing from said academics for a long time. - Zerohedge

Chart courtesy of Zerohedge

When it comes to gold and silver, there are a few names (Bob Chapman, Eric Sprott, etc...) that are worth listening to. Everyone else... hasn't a clue to be found in their baskets of BS.

Monday, January 9, 2012

Zeit Online issued an interesting report on Greece, and how they have spent much of the bailout money they received from the IMF, ECB, and other EU sources. It appears that the Mediterranean country has been buying military armaments including helicopters, frigates, and german subs.

In a story on Zeit Online, the details of the multi-billion Euro new arms contracts are exposed as the European reach-around would be complete with IMF (US) and Europe-provided Greek bailout cash doing a full-circle into American Apache helicopters, French frigates, and German U-Boats. As the unnamed source in the article notes: "If Greece gets paid in March the next tranche of funding (€ 80 billion is expected), there is a real opportunity to conclude new arms contracts." With the country's doctors only treating emergencies, bus drivers on strike, and a dire lack of school textbooks and the country teetering on the brink of Drachmatization, perhaps our previous concerns over military coups was not so far-fetched as after the Portuguese (another obviously stressed nation), the Greeks are the largest buyers of German war weapons. – Zerohedge

Whether the threat of an internal coup, or the ramping up of conflict with Turkey over Cypress is real, the real truth is that governments are obliged to themselves, not to the needs of their citizens, and is in many ways similar to the US in their continuous need to fund the military, even as people lose their homes and remain unemployed.

Since 2001, over $34 billion dollars in grant money has been given to local law enforcement to militarize them in the 'war on terror'. Unfortunately, the end result has been to expand this into a war on the American people as military grade weapons, armor, and tactics have been used more frequently in simply criminal arrests, and raids on non-terror targets.

Since Sept. 11, 2001, thousands of communities across the nation have taken advantage of more than $34 billion in central government grants to equip police and sheriffs’ departments with assault rifles and exotic weaponry.

In 2011 alone, approximately $2 billion in grants were awarded by the Department of Homeland Security (DHS), along with $500 million more allocated to existing programs.

The accounting for this expense was recently compiled by the Center for Investigative Reporting and detailed in a report, “America’s War Within: Homeland security and the first 10 years of the war on terror.” – American Free Press

For those who fail to learn history, the creation of a bogie man, in this case, terrorists on every street corner, has inevtiably led to the bogie man being the very people governments promised to protect. 1920's and 30's Europe is the biggest example of how a government used straw men (communists) to create internal gangs and armed security forces that eventually led to imposing tyranny on their own citizens.

In a report today from CNBC, the Obama administraton is planning to implement a new program to take the hundreds of thousands of government owned (Fannie/Freddie) foreclosures and dump them onto the markets in a pilot program.

The Obama administration, in conjunction with federal regulators and led by the overseer of Fannie Mae and Freddie Mac, is very close to announcing a pilot program to sell government-owned foreclosures in bulk to investors as rentals, according to administration officials.

There currently are about a quarter of a million foreclosed properties on the books of Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA), and millions more are coming. The foreclosure processing delays of last year created a mammoth backlog of properties yet to be processed, which are just now being re-started. One of the initiatives of this program is for the federal government to be in the position to mitigate and manage any new wave of foreclosures, sources say. – CNBC via Yahoo

The end result will be two-fold here. First, home prices are still falling in most major metro areas, and this will only drive prices down even more. Secondly, with the government choosing to dump their foreclosure inventories, how many banks that own millions of homes in the shadow inventory will be pressed to do the same, and dump their stock in a 'last one to the door' effort?

Either way, expect home values to continue to fall around the country, or at best, remain stagnant for more years to come.

2011 saw Italy, Spain, Ireland, and Greece in the headlines, both as nations in default of their debts, and experiencing social unrest for a declining economy and mass unemployment. Entering the new year, we can now add Germany to the growing list of countries in recession, as noted by more than a dozen economists who have come to this conclusion.

The German economy is in for a weak start in the new year. This is the result of a survey of "World Online" under 14 bank economists. The majority of experts expected that the gross domestic product (GDP) over the past three months has shrunk.In the first quarter of 2012, this decline is likely to intensify further. Technically, Germany is thus already in the midst of a recession. An economy is by definition in decline when economic output is two consecutive quarters. – Zerohedge via Bild

A German economy in recession will only complicate the matters in the Euro Zone, as staunch inflation hawks will now fight against a growing population who will demand intervention if the economic downturn continues over an extended period of time. What this means for the rest of the EU, and if Germany will be willing to help bailout its neightbors has yet to be seen.

Sunday, January 8, 2012

French bank Societe Generale (SocGen) came out with a new assessment for oil prices now that Europe has bought into the potential of an embargo on Iranian oil, and the possibility of a closure of the Straits of Hormuz.

Previously we heard Pimco's thoughts on the matter of an Iranian escalation with "Pimco's 4 "Iran Invasion" Oil Price Scenarios: From $140 To "Doomsday"", now it is the turn of SocGen's Michael Wittner to take a more nuanced approach adapting to the times, with an analysis of what happens under two scenarios - 1) a full blown EU embargo (which contrary to what some may think is coming far sooner than generally expected), and the logical aftermath: 2) a complete closure of the Straits. The forecast is as follows: 1) "Scenario 1: EU enacts a full ban on 0.6 Mb/d of imports of Iranian crude. In this scenario, we would expect Brent crude prices to surge into the $125-150 range." 2) "Scenario 2: Iran shuts down the Straits of Hormuz, disrupting 15 Mb/d of crude flows. In this scenario, we would expect Brent prices to spike into the $150-200 range for a limited time period." - Zerohedge

For all these years, Americans have been calling for oil independence, and we had more than a decade during the Iraq/Afghanistan war years to do it. However, because of the Gulf spill, and anti-drilling sentiments of the Obama administration, consumers here and in Europe can expect to pay for the ideological agendas of progressive nutjobs who know nothing of business and economics.